Economy

Hoisted from comments:
I am SAC Capital. I get to be one of the bidders on bank assets covered by the program

Citi holds $100mm of face-value securities, carried at $80mm.

The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm.

I bid Citi $75mm. I put up $2.25mm or 3%, Treasury funds the rest.

I then buy $10mm in CDS directly from Citi [or another participant (BOA, GS, etc)] on the bonds for a premium of $1mm.

In the fullness of time, we get the final outcome, the bonds are worth $50mm

SAC loses $2.25mm of principal, but gets $9mm net in CDS proceeds, so recovers $6.75mm on a $2.25mm investment. Profit is $4.5mm

Citi writes down $5mm from the initial sale of the securities, and a $9mm CDS loss. Total loss, $14mm (against a potential $30mm loss without the program)

U.S. Treasury loses $22.75mm

Great program.

It's just a scheme to transfer losses from the bank to the taxpayer with an egregious payout to a middleman (SAC) to effectively money launder the transaction.

You've also transmuted a $30mm economic loss into a $36.75mm economic loss because of the laundering. So its incredibly inefficient.

How did fraud and money laundering become the national economic policy of the US?

One would have to be a criminal to participate in this.

Folks, this IS even worse than I thought, and you know I have a constitutional predisposition to take a dim view of things (although it was clear from the get-go that the introduction of private parties to give air cover to the Treasury would make the exercise more costly without adding any value).

I suggest you write/e-mail your Congressmen, and more important, any of you who have MSM media contacts, call this to their attention. There will no doubt be useful further grist on this thread and on the post on which this comment first appeared. But the analysis above is damning on its face. I'd like to have someone have Geithner try to explain why it WON"T work like that, and how this abortion solution is in our collective best interest.

AIG bonuses are a sideshow (as offensive as they are, don't get me wrong on that one, the symbolism is awful). It is diverting attention from the real crimes and serving to get nay-sayers branded as populists, which is code for "jealous of their betters".

But this sort of thing in reality, as Paul Krugman points out today, is not a class issue (otherwise, why would the member of SAC Capital be so appalled) but a recognition that the program is so heinous that it represents a fundamental danger to an already damaged economy:
... that these funds will have skewed incentives. In effect, Treasury will be creating - deliberately! - the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn't, that's someone else's problem.

Krugman's comparison to the S&L crisis is actually too favorable. The losses then were only $100-$120 billion in total. The damage (as in losses to the taxpayer) on this one program are almost certain to be greater if the Administration gets its hoped-for take-up.

Now that level of loss (ex the unnecessary subsidy) might well be warranted IF it were putting the markets on a sound footing, by providing a backstop while investors did price discovery on bad assets. Price discovery is a necessary part of this process. One could argue the reason the offer in the illustration above is $80 million and the bid is only $30 million is that no one is interested in bidding when the sellers aren't serious. If the banks really were to start unloading assets, the initial buyers would get a steal, but more capital would come forward. You might not see bids rising to the "fullness of time" $50 million level, but you would see bidding rise above the current level. (Note, however, that the banks simply are not willing to show more losses, which means, as in the S&L crisis, the bad assets need to come into government hands via institutions that are in the worst shape being declared insolvent and taken over, and the assets sold out of receivership. There is simply no sensible mechanism by which the government can provide these massive subsidies. We've now had three attempts at it, two under Paulson, and now the Geithner monstrosity. A bad idea is a bad idea. We need to move on to Plan B).

With price discovery (or the equivalent via more realistic marking of their books), some banks would be toast and need to be put in a form of receivership. But pretending these banks are viable, keeping the incumbents in place (who have incentives to take risk with taxpayer money, if nothing else so they can try to show profits and slip the leash) is the worst of all worlds. Some of the big banks already have been nationalized from an economic perspective, yet we keep alive the dangerous and costly fiction that they are functioning, private concerns. The Japanese did a variant of this program via letting zombie banks grossly overvalue dead loans, and look how well it served them.

There may also be a Constitutional issue, as another reader alleged:
Geithner/Summers are willfully evading Congressional oversight. After the Tequila/Mexico financial crisis, the banks wanted 20 billion and Congress wouldn't give it, so Summers/Geithner under Clinton evaded that buy misusing the government's ESF, argually illegally. Now, given that Congress doesn't want to authorize more money, Summers/Geithner are trying to misuse Fed/ DIC authority to hand out cash. This is illegal because the FDIC and Fed are authorized to lend, but not to hand out gifts/grants. Lending non-recourse undercollateralized is a gift/grant.

I know we are all suffering from outrage fatigue, but this is a worthy target for your ire. I hope you find a productive outlet for it.

WASHINGTON (AP) -- Regulators on Friday shut down banks in Georgia, Colorado and Kansas, marking 20 failures of federally insured banks this year. More are expected to succumb to the prolonged recession.
The Federal Deposit Insurance Corp. was appointed receiver of the failed banks.

FirstCity Bank of Stockbridge, Ga., had about $297 million in assets and $278 million in deposits as of March 18. Colorado National Bank of Colorado Springs, Colo., had $123.5 million in assets and total deposits of $82.7 million as of Dec. 31. Paola, Kan.-based Teambank N.A. had assets of $669.8 million and total deposits of $492.8 million as of Dec. 31.

The FDIC said it will mail checks to depositors of FirstCity Bank for their insured funds on Monday morning. Direct deposits from the federal government, such as Social Security and veterans' benefits payments, will be transferred to SunTrust Bank.

At the time of closing, FirstCity Bank had an estimated $778,000 in deposits that exceeded the insurance limits, the FDIC said. Regular deposit accounts are insured up to $250,000.

Amarillo, Texas-based Herring Bank will assume all of the deposits of Colorado National, whose four branches will reopen as Herring Bank branches on Saturday.

In addition to assuming all of the deposits of the failed bank, Herring Bank agreed to buy about $117.3 million in assets at a discount of $4.2 million. The bank agreed to pay a 1 percent premium on the deposits.

The FDIC said it will keep the bank's remaining assets for future sale. Additionally, Herring Bank entered into a loss sharing agreement with the FDIC, wherein the FDIC will assume 80 percent of the losses and Herring Bank 20 percent of the losses on $62 million in assets.

Teambank's 17 branches will reopen on Saturday as branches of Great Southern Bank. The Springfield, Mo.-based bank is assuming $474 million of Teambank's deposits for about $4.7 million, while the FDIC is paying out $18.8 million in deposits directly to brokers.

Great Southern Bank has also agreed to buy about $656.5 million in assets at a discount of $100 million. The remaining assets will be sold at a later date, the FDIC said. Additionally, the FDIC has agreed to cover 80 percent of the losses on about $450 million in assets, while Great Southern Bank will cover the remaining 20 percent of losses.

The FDIC said Teambank was affiliated with Colorado National Bank.

The FDIC estimates that the cost to the deposit insurance fund from the closings of the three banks will be about $207 million.

The last bank closing, two weeks ago, involved a Georgia bank, Freedom Bank of Georgia in Commerce, Ga.

As the economy sours, unemployment rises, home prices tumble and loan defaults soar, bank failures have cascaded and sapped billions out of the deposit insurance fund. It now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.

The agency said Friday that the nation's banks and thrifts lost $32.1 billion in the final quarter of last year, even worse than the $26.2 billion originally reported last month. "Significant" revisions also lowered the industry's net income for all of 2008 to $10.2 billion from $16.1 billion.

Rising losses on loans and eroding values of assets bit into the revenue of U.S. banks and thrifts in late 2008, causing them to post the first quarterly deficit in 18 years.

The $26.2 billion loss originally reported for the October-December period already was the largest in 25 years of FDIC records. It compared with a $575 million profit in the fourth quarter of 2007.

And the originally reported 2008 net income of $16.1 billion was the smallest annual profit since 1990, during the savings and loan crisis.

The 18 bank collapses this year follow 25 failures in 2008, which included two of the biggest savings and loans, Washington Mutual Inc. and IndyMac Bank. Last year's total was more than in the previous five years combined and up from only three failures in 2007.

The FDIC had 252 banks and thrifts on its list of troubled institutions at the end of 2008, up from 171 in the third quarter.

The agency recently raised the fees that U.S. banks and thrifts pay, and levied a hefty emergency premium in a bid to collect $27 billion this year to replenish the insurance fund.

President Barack Obama has outlined a federal budget proposal that calls for spending up to $750 billion for additional financial industry rescue efforts atop the $700 billion that Congress has already approved.

Citigroup Inc. and Bank of America Corp., for example, have had to go back to the government well for more cash amid continuing losses from toxic assets and soured consumer loans. They each have received $45 billion in bailout money, and the government recently agreed to exchange up to $25 billion of Citigroup's portion for as much as a 36 percent equity stake in the struggling banking giant.

AP Business Writer Sara Lepro contributed to this report from New York.

WASHINGTON (AP) - President Barack Obama's budget would produce $9.3 trillion in deficits over the next decade, more than four times the deficits of Republican George W. Bush's presidency, congressional auditors said Friday.

The new Congressional Budget Office figures offered a far more dire outlook for Obama's budget than the new administration predicted just last month - a deficit $2.3 trillion worse. It's a prospect even the president's own budget director called unsustainable.

In his White House run, Obama assailed the economic policies of his predecessor, but the eye-popping deficit numbers threaten to swamp his ambitious agenda of overhauling health care, exploring new energy sources and enacting scores of domestic programs.

The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his Democratic allies controlling Congress would have to consider raising taxes after the recession ends or else pare back his agenda.

By CBO's calculation, Obama's budget would generate deficits averaging almost $1 trillion a year of red ink over 2010-2019.

Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

White House budget chief Peter Orszag said that CBO's long-range economic projections are more pessimistic than those of the White House, private economists and the Federal Reserve and that he remained confident that Obama's budget, if enacted, would produce smaller deficits.
Even so, Orszag acknowledged that if the CBO projections prove accurate, Obama's budget would produce deficits that could not be sustained.

"Deficits in the, let's say, 5 percent of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable," Orszag told reporters.

Deficits so big put upward pressure on interest rates as the government offers more attractive interest rates to attract borrowers.

"I think deficits of 5 percent (of GDP) are unsupportable," said economist Mark Zandi, chief economist at Moody's Economy.com. "It will lead to higher interest rates to the point where it will force policymakers to make changes."

Republicans immediately piled on.

"This report should serve as the wake-up call this administration needs," said House Minority Leader John Boehner, R-Ohio. "We simply cannot continue to mortgage our children and grandchildren's future to pay for bigger and more costly government."

But Obama insisted on Friday that his agenda is still on track.

(AP) Resubmission of a graphic which shows budget proposal breakdown for fiscal 2010 and estimated...

"What we will not cut are investments that will lead to real growth and prosperity over the long term," Obama said. "That's why our budget makes a historic commitment to comprehensive health care reform. That's why it enhances America's competitiveness by reducing our dependence on foreign oil and building a clean energy economy."

Obama's $3.6 trillion budget for the 2010 fiscal year beginning Oct. 1 contains ambitious programs to overhaul the U.S. health care system and initiate new "cap-and-trade" rules to combat global warming.
Both initiatives involve raising federal revenues sharply higher, but those dollars wouldn't be used to defray the burgeoning deficit and would instead help pay for Obama's health plan and implement Obama's $400 tax credit for most workers and $800 for couples.

Obama's budget promises to cut the deficit to $533 billion in five years. The CBO says the red ink for that year will total $672 billion.

Most disturbing to Obama allies like Senate Budget Committee Chairman Kent Conrad, D-N.D., are the longer term projections, which climb above $1 trillion again by the end of the next decade and approach 6 percent of GDP by 2019.

Among about a dozen major changes to Obama's budget, Conrad is looking to curb Obama's 9 percent increase for non-defense appropriations to show short-term progress and insists that the long-term deficit and debt crisis will have to be addressed via a special bipartisan commission.

"The budget that I'll submit will cut the deficit by more than two-thirds over these first five years," Conrad. "These imbalances are just absolutely unsustainable."

The worsening economy is responsible for the even deeper fiscal mess inherited by Obama. As an illustration, CBO says the deficit for the current budget year, which began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House. That would equal 13 percent of GDP, a level not seen since World War II.

The 2009 deficit, fueled by the $700 billion Wall Street bailout and diving tax revenues stemming from the worsening recession, is four times the previous $459 billion record set just last year.

The CBO's estimate for 2010 is worse as well, with a deficit of almost $1.4 trillion expected under administration policies, about $200 billion more than predicted by Obama.

Long-term deficit predictions have proven notoriously fickle - George W. Bush inherited flawed projections of a 10-year, $5.6 trillion surplus and instead produced record deficits - and if the economy outperforms CBO's expectations, the deficits could prove significantly smaller.

The administration says it inherited deficits totaling $9 trillion over the next decade and that its budget plan cuts $2 trillion from those deficits. But most of those spending reductions come from reducing costs for the war in Iraq.

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This weekend: I'm keeping the news I selected short but I don't think there is one article you want to miss. I'm doing this for three reasons:

Chris has some content I'd read before reading this

I'd be sure to listen to the FSN clips I posted

FSN is about an hour of listening and Leno is about :30 minutes

I'll be working my way through Puplava's FSN News Hour (the rest of the 3 hours) this weekend.

Also, I'm finishing Michael Covel's Trend Following book. It is a page turner, and soon I'll be reviewing his latest book soon to be released.

I didn't know anything about Trend Following, never even heard of it. I had always believed that you must know macro economics to invest. While I still plan to stay "maco-informed" we plan to trend follow, I can't find one argument not to.

I grabbed the book when Marsh and I wanted to refresh on options trading to go short as everything tanked. The cover of a herd caught my eye and in the pile it went, Friedman's The Lexus and the Olive Tree book had a good bit on the electronic herd. Covel's herd cover jumped out at me and I thought - this guy knows. Several weeks later was flipping through his book piled amidst the dozen others I'm reading and I recognized Covel's picture in the book, I had seen it on one of the better blogs I visit each day.

Tomorrow I'll write some on chapter 6, Human Behavior. It is shocking, and a lot of what I see with people who go straight into denial when I bring up Chris's site is clearly defined and explained within.

Here are a few Chapter 6 quotes: "When popular opinion is nearly unanimous contrary thinking tends to be the most profitable. The reason is that once a crowd takes a position, it creates a short-term self-fulfilling prophecy. But when a change occurs everyone seems to change his mind at once."

Another: "Greed, hope fear, and denial, herd behavior, impulsiveness and impatience wth process ('Are we there yet?") are still around and if anything more intensely so....That given the choice between a simple, easy to understand, explanation that works and a difficult one that doesn't, people tend to pick the latter. People would rather have any story about how a series of price changes happened than that there is no rational reason for it."

We don't have cable or dish or reception. Last night we went to Nate's site and watched the Commeidan-in-Chief video of President Obama on Leno with our Mac in bed. I voted, and not for McCain OR Obama. I have no grudge againt the guy, seems like a nice enough guy, and as a bonus he can complete sentences. That said, the only comical part of Late Night was his belief that the plan Summers et al have will work. Since the laugh is on us it ain't a laugh. I sat there wondering if I had slipped off into a dream. Late Nite was better than CNBC or Bloomberg when it comes to economic interviews. What a nightmare that is. These cable companies are contributing to this economic mess becuase they don't report they repeat. Commedian's are wise guys but they are smart.

Well enough of my drivel, my kid turned 17 and I'm going with my family skating and trying to forget this mess. After wathcing Leno all I could think of is what Covel says in chapter 6: "But when a change occurs everyone seems to change his mind at once." After watching "President I've listened to idot advice" I'm going to try to not think about what change is going to be like. Funny, wasn't "Change" his campaign platform.

Right at the end of the pizza guy video, they want to buffer their kids from "all of this"? It looks like those save a child in Africa telethons. A real life version of the sponsor an executive vid. IF he really is sheilding the kids from "all of this" does he realize that his job won't keep them in the latest Ipod or PS4 game?

I wonder who is benefiting from all that money beyond what is insured? Who's pocket is that in right now? My step-father once told me, if anyone tells you they got rich from hard work and sweat, as them whose.

I want to emphatically echo Davos' advice to listen to the financial sense newshour, particularly segment 3a which was particularly interesting.

If your answer is "Oh, I'm not really into that podcast stuff", then today would be a really good day to join the new generation. If you don't have an iPod, just download the mp3 and play it on your computer.

I find listening to the entire Financial Sense Newshour (all 3 hours) to be the single most useful thing I do to keep myself up to date on markets.

Dan Carlin's latest podcast (http://dancarlin.com/disp.php/cs) has an interesting take on why the present media is not doing its job, and he commends people like Jon Stewart for taking them to task (the whole CNBC thing). It's the 2nd half the show.

I find it interesting to note how many different sources and people I'm in contact with lately seem to be professing similar thoughts on what's going on. Hopefully that will continue and progress into some beneficial changes.

It's a collection of quotes from bankers, politicians and the other usual suspects throughout the Great Depression. Right from the start, all kinds of "experts" were certain a recovery was just around the corner. They were wrong.

CM readers know very well to take all such claims with a huge grain of salt.

it is very clear where this is heading. Chris, I am, again, really impressed with the numbers and shocked at the deficits, you really did a super job disecting this.

I agreed with everything but, I have to be honest, I don't get where you think this won't be a 100% train wreck. Hope your right but with Enron numbers like this I don't see how they could possibly pull this one out thier buts.

Trend Following is a great book on concepts, theory, etc. But just an fyi, it doesn't do anything to help setup a trend following operational trading system. The best traders seem to not really care about the concepts/theory behind it. I know a few people who tried doing their own trading based on MACD indicators, stochastics, etc. in the book and they lost everything. Key is to learn from somebody who has already created a profitably operating system, like the one Dogs recommends.

Is there any way to estimate how long we have before things really start to fall apart and what kinds of things we should expect? Reading the various articles and listening to financial sense it becomes obvious that a collapse will happen soon but just when and how bad is what im wondering.

Hello FireJack: A friend of mine laid this out to me in 1995. Though it wasn't as articulate as Chris's Crash Course he knew his stuff inside out. He said it best, "These things take a long time to play out." That said, one article, I think Mike Pilat posted was about this in Argintina. To summarize: It was like everyone got tired of waiting for this economic storm and then BAM - it hit.

Up until the last month I thought the collapse would be a "long emergency" type scene and the run for the hills doom one was just a bit too extreme. This situation with a US collapse is starting to look like a doom scenario and every day it gets closer and every day it gets worse. When I read the oil drum article on how a collapse in economic system could cause a collapse in oil production I really started to get worried and now that doomer situation does not seem so crazy.

Right now this is the situation I see unfolding in the states with my limited knowledge:

1. U.S. economy collapses, government suddenly has to cut its spending to what it can afford which is increasingly less. Violent protests begin, roads bridges etc degrade, schools close, whatever medical system you guys have there in the states collapses. This would result good no longer being able to be delivered by trucks as the roads would be impassible by such vehicles. A lot of people would die due to lack of medical care (ie pharmicuticals) , lack of food, etc. God know what kind of chaos would be going on then.

I don't know what will happen in the rest of the world but as for us canadians I can't imagine we will fare much better. We are in a much better position coming in but our economy is of course mostly dependent on the states. Most of the food are from far off places and if everyone suddenly had to go local it would not last.

A lot of people would die due to lack of medical care (ie pharmaceuticals) , lack of food, etc. God know what kind of chaos would be going on then.

It's amazing how many people are dependent on daily meds. This may be THE major way the population gets thinned down.

Prescription drug use has surged in the last decade--pair that with statistics that show in 2007 that the rate of deaths caused by prescription drugs was three times that of the deaths from all illicit drugs combined!

French children are told a story in which they imagine having a pond with water lily leaves floating on the surface. The lily population doubles in size every day and if left unchecked will smother the pond in 30 days, killing all the other living things in the water. Day after day the plant seems small and so it is decided to leave it to grow until it half-covers the pond, before cutting it back. They are then asked, on what day that will occur. This is revealed to be the 29th day, and then there will be just one day to save the pond.

The world by numbers

1 million Britain's population in Roman times

6 million Britain's population around the time of the English civil war

47 million Britain's population in 1945

52,000 The number of tonnes of carbon dioxide pumped into the atmosphere every minute

267 The average number of births every minute worldwide; the average number of deaths per minute is 118

78 million The planet's annual population increase, a number roughly equivalent to the population of Germany1 million The number of chimpanzees in Africa in 1900. Today, thanks to habitat loss and hunting, numbers have dropped to around 15,000

38.4 The median age in the UK rose from 34.1 years in 1971 to 38.4 in 2003 and is projected to reach 43.3 in 2031. (The median is the age that separates the oldest half of the population from the youngest.)

10 billion The number of chickens eaten by man worldwide every year

500 million The number of ducks eaten every year

1.3 billion The population of China1.2 billion India's population

500 million The population of the EU

74 million The number of barrels of oil pumped daily across the planet; 15 million tonnes of coal are dug every day

9 Between 2010 and 2050, nine countries will account for half of the world's projected population increase: India, Pakistan, Nigeria, Ethiopia, the United States, the Democratic Republic of Congo, China, Bangladesh, Tanzania

"Why would the US government start doing that? They don't think like
the rest of us. Besides, they have the military to threaten others."

This is based on what denninger says here:

"The danger is that in trying to suppress the long end of the curve is that it can fail.
That is, the move we had today (which was massive) can be fleeting -
and then reverse. This of course would force Ben to do it again, and
again, and again. Ultimately he could wind up owning the entire long
end of the curve or even worse, the entire $6 trillion public Treasury
float.

This is the "economic collapse" scenario, because further
government spending in such a situation requires the dilution of all
existing money in the system by the same amount spent. This is a
circle jerk - you're not actually able to spend that money and get the
goods and services you want as a government, since you are creating and
consuming at the same time. As such the operations cancel each other
in effect and the government finds it cannot fund its internal
operations with Treasury issuance any more, being forced back onto
whatever tax base it has left (which won't be much at that point!)"

1. U.S. economy collapses, government suddenly has to cut its spending to what it can afford which is increasingly less. Violent protests begin, roads bridges etc degrade, schools close, whatever medical system you guys have there in the states collapses. This would result good no longer being able to be delivered by trucks as the roads would be impassible by such vehicles. A lot of people would die due to lack of medical care (ie pharmicuticals) , lack of food, etc. God know what kind of chaos would be going on then.

I don't know what will happen in the rest of the world but as for us canadians I can't imagine we will fare much better. We are in a much better position coming in but our economy is of course mostly dependent on the states. Most of the food are from far off places and if everyone suddenly had to go local it would not last.

Hi FireJack,

I really don't subscribe to the idea of a sudden collapse of the infrastucture due to a financial crisis. It's much more likely to be a gradual decrease in the quality of services - The inevitable consequence is the creation of a 2 tier system, where there are good private hospitals, private schools, etc. for the rich and very bad ones for the "rest".

This is what I saw during a major financial crisis growing up - Equivalent to what the group here refers to as SHTF...

The thing that I find really interesting with the North American mind set is the belief that it's "all or nothing". I mean, the belief that if North American society has to change it will be from one extreme to the other.

90% of the World functions with a small fraction of what Americans have, and they aren't shooting each other for supplies. So it's funny that when North Americans come to terms with the fact that things WILL change here they automatically go to the extreme, thinking that society will crumble...

There are 2 things that I believe will happen in the U.S., first will be a change in mindset to a much more frugal one. All the sudden your grandma, that used to wash the ziplock bags and re-use Christmas wrapping paper won't sound so crazy.

Second there will be a major shift into a class system - If you think that the U.S. already is such a system then you need to spend a few years in a developing country...

There is a long shot possibility that there will a major political shift, some kind of revolution. But I think that the masses are so brainwashed by the media that the likelyhood of that happening is, unfortunately, near zero.

As for Canada (I'm from Calgary), I believe that our best hope is to diversify our trade partners and walk the tight rope of political relations with the U.S. I'm not sure of where you live that gives you the idea that we are dependent on other countries for most of our food - Canada is actually one of the largest food exporters in the World (Mostly grains and beef) - Sad to say, but food shortages are really good for our GDP. Mind you, we won't be enjoying as many mangoes and papayas, since they don't grow in our climate... :)